]]>Severe weather and flooding that impacted much of the Midwest are expected to cause multinational agribusiness company Archer Daniels Midland to lose millions of dollars.

ADM’s
Carbohydrate Solutions and Origination operations, which process corn into food
and fuel products, were mainly impacted by the weather and flooding.

The company announced
Monday it expects to lose between $50 million and $60 million dollars in the
first quarter from these operations.

The company made
$717 million in the first-quarter of 2018. ADM made a total of $3.4 billion in
2018.

“Extreme winter
weather has affected our first quarter North American operations beyond what we
would experience in a typical winter,” according to a press release from Archer
Daniels Midland.

ADM closed down
a corn processing plant due to flooding in Columbus, Nebraska. This plant also
announced that it will not accept any corn damaged by the flooding.

“The extreme
weather reduced corn processing volumes principally due to a slowdown in rail
and truck transportation, which affected both inbound and outbound shipments,”
according to the statement from ADM.

Barge traffic
has been severely limited since December due to unfavorable conditions, ADM
said. This has also impacted farmers by lowering corn and soybean prices
throughout the region.

The severe
weather impacted grain storage, plants and railroads as well. Corn and soybean
harvests from 2018 were still being stored in grain bins many of which were
damaged during the flooding. Any corn that spilled out would be contaminated
and destroyed. Rail lines are also washed out, all of which has impacted corn
prices throughout the area and the United States.

These conditions
also affected farmers in parts of the Midwest including in Nebraska and Iowa.
The United States Department of Agriculture projected a loss of $3 billion to farmers.

Federal Railroad
Administration Administrator Ronald L. Batory declared
an emergency in March due to the extreme flooding in the Midwest.

The National
Weather Service said the threat for flooding was
greatly increased due to high soil moisture, frost depth, elevated river
levels and ice jams and an increasing snowpack throughout the Midwest. This
caused rivers to reach unprecedented levels in 40 places causing breached dams,
levees and power outages.

Severe flooding
and heavy downpours in the Midwest in recent years are in line with global
climate change assessments from local and national scientists.

“Extreme heat,
heavy downpours, and flooding will affect infrastructure, health, agriculture,
forestry, transportation, air and water quality, and more,” according to the
National Climate Assessment.

ADM has
previously identified risks from climate change in their annual report to the
United States Security Exchange Commission.

“The
availability and prices of the agricultural commodities and agricultural
commodity products the Company procures, transports, stores, processes, and
merchandises can be affected by climate change, weather conditions, disease,
government programs, competition, and various other factors beyond the
Company’s control and could adversely affect the Company’s operating results,”
according to the report.

]]>https://investigatemidwest.org/2019/04/03/recent-flooding-costs-grain-trader-archer-daniels-midland-millions-in-losses/feed/0Archer Daniels Midland wins arrest warrants over missing rice moneyhttps://investigatemidwest.org/2015/08/18/archer-daniels-midland-wins-arrest-warrants-over-missing-rice-money/
https://investigatemidwest.org/2015/08/18/archer-daniels-midland-wins-arrest-warrants-over-missing-rice-money/#commentsTue, 18 Aug 2015 15:08:37 +0000http://investigatemidwest.org/?p=12473Arrest warrants have been issued for a Nicaraguan grains business owner and his daughter after the pair failed to pay $2.5 million to Archer Daniels Midland for import contracts. The Nicaraguan grains business allegedly failed to pay millions of dollars to Chicago-based agriculture superpower ADM for rice imports, according to Reuters.

Arrest warrants have been issued for a Nicaraguan grains business owner and his daughter after the pair failed to pay $2.5 million to Archer Daniels Midland for import contracts.

The Nicaraguan grains business allegedly failed to pay millions of dollars to Chicago-based agriculture superpower ADM for rice imports, according to Reuters.

As a result, the agribusiness has sought sanctions through the London High Court, which has issued an arrest order for the business’s owner and a senior officer.

Reuters reported on Aug. 13:

In the ADM case, over 6,500 metric tonnes of U.S.-origin rice was shipped to the importer, Corcosa - Corporacion Comercializadora de Granos Basicos, in 2011 and 2012, under six sale contracts in dispute.

Each of those contracts is governed by English law and subject to arbitration by London-based GAFTA - the Grain and Feed Trade Association.

ADM spokeswoman Jackie Anderson said, "On July 21, ADM and its subsidiary ADM Rice, Inc. obtained sanctions from the UK High Court in London against a Nicaraguan company named Corporación Comercializadora de Granos Básicos ("Corcosa"); its owner and president, Enrique Jose Delgadillo Aguirre; and Mr. Delgadillo's daughter and the executive director of the company, Vanessa Auxiliadora Delgadillo Sacasa."

The court imposed prison sentences of up to 18 months on Enrique and Vanessa Delgadillo after it found they had disregarded its orders, Anderson said.

]]>https://investigatemidwest.org/2015/08/18/archer-daniels-midland-wins-arrest-warrants-over-missing-rice-money/feed/1Corn refiners ready to take on the sugar industryhttps://investigatemidwest.org/2015/06/26/corn-refiners-ready-to-take-on-the-sugar-industry/
https://investigatemidwest.org/2015/06/26/corn-refiners-ready-to-take-on-the-sugar-industry/#respondFri, 26 Jun 2015 11:33:00 +0000http://investigatemidwest.org/?p=9368The Corn Refiners Association is gearing up to take on the sugar industry. According to a June 24 Washington Post exclusive, the Corn Refiners Association plans on investing in a lobbying effort to take apart decades-old sugar subsidies and tax breaks. The Washington Post reported that the association recently hired 10 outside lobbyists.

The Corn Refiners Association is gearing up to take on the sugar industry.

According to a June 24 Washington Post exclusive, the Corn Refiners Association plans on investing in a lobbying effort to take apart decades-old sugar subsidies and tax breaks. The Washington Post reported that the association recently hired 10 outside lobbyists.

Although the sugar industry has historically found high ground in politics, the Corn Refiners Association is backed by some of the most powerful agribusinesses in the world. Two of its four members are Midwest-based agribusinesses giants Archer Daniels Midland and Cargill.

The other two are Ingredion Incorporated and Tate & Lyle Americas.

The Washington Post reported:

While other crop subsidies have withered, Washington’s taste for sugar has been constant. The sugar program, which has existed in various forms since the 1930s, uses an elaborate system of import quotas, price floors and taxpayer-backed loans to prop up domestic growers, which number fewer than 4,500.

Sugar’s protected statusis largely explained by the sophisticationand clout of a small but wealthy interest group that includes beet farmers in the Upper Midwest, cane growers in the South and the politically connected Fanjul family of Florida, who control a substantial part of the world sugar market. That mix of factors has led to an eclectic coalition on sugar’s side, from Sen. Marco Rubio (R-Fla.) to Sen. Al Franken (D-Minn.).

“While every other farm support program has received multiple rounds of reforms, big sugar has not been touched,” said John Bode, CEO of the Corn Refiners group.

The association has remained relatively consistent in its lobbying efforts, as disclosure records show it has spent at least $10,000 lobbying in each of the last five quarters. Those records show the association has shifting its focus on the sugar industry before, as well.

In the second, third and fourth quarters of 2014, the association listed “potential trade disruption related to the U.S. sugar industry’s trade dispute against sugar imported from Mexico” among its lobbying interests.

In comparison, American Sugar Alliance spent at least $780,000 lobbying in the first quarter of 2015 alone.

]]>https://investigatemidwest.org/2015/06/26/corn-refiners-ready-to-take-on-the-sugar-industry/feed/0Move away from trans fat may boost ADM’s palm oil investmentshttps://investigatemidwest.org/2015/06/24/move-away-from-trans-fat-may-boost-adms-palm-oil-investments/
https://investigatemidwest.org/2015/06/24/move-away-from-trans-fat-may-boost-adms-palm-oil-investments/#respondThu, 25 Jun 2015 04:35:52 +0000http://investigatemidwest.org/?p=9214The U.S. Food and Drug Administration announced last week that it would take significant steps toward eliminating trans fats in American food within the next three years. The move will likely change the way major food producers make popular foods, including some coffee creamers, frozen pizzas, refrigerated dough products and fast food. According to experts, this production change will be largely propelled by an increase in the demand for palm oil, a substitute made from certain tropical trees.

The U.S. Food and Drug Administration announced last week that it would take significant steps toward eliminating trans fats in American food within the next three years.

The move will likely change the way major food producers make popular foods, including some coffee creamers, frozen pizzas, refrigerated dough products and fast food. According to experts, this production change will be largely propelled by an increase in the demand for palm oil, a substitute made from certain tropical trees.

As a result, Chicago-based Archer Daniels Midland may be in a position to profit.

Annual financial reports show that ADM has a 17.3 percent ownership interest in the palm-oil cultivator Wilmar International Limited. Wilmar has headquarters in Singapore and is a leading agribusiness group in Asia.

“Palm oil is an extraordinarily versatile product employed in a wide range of applications,” an ADM news release stated. “Refined varieties are used in manufacturing shortenings, cooking oils, margarines, baked goods and a host of other food related ingredients and finished products.”

Although palm oil is healthier and does not include trans fats, environmentalists have pointed out that it is often produced at great cost to the world’s rainforests. Glenn Hurowitz, chairman of the Forest Heroes campaign to promote sustainable agriculture, discussed deforestation concerns in a recent NPR interview:

“Well, palm oil is grown, mostly, in the Paradise Forests of Southeast Asia. They're these vast rain forests that are home to Sumatran tigers, rhinos, orangutans and Sumatran elephants, all of which are endangered species. But the palm oil industry has cleared over 30,000 square miles of rain forest. Much of that rain forest actually sits on these ultra-carbon-rich ecosystems called peatlands that are - have accumulated thousands of years of biological material. So, not only is clearing these vast forests for palm oil plantations threatening biodiversity, it's also a globally significant source of carbon pollution.”

ADM officials have repeatedly expressed their concerns over palm-oil related deforestation through company news releases. In May, the agribusiness pledged to only offer certified sustainable palm oil to its North American customers starting in 2015. If certified as sustainable, the oil cannot come from illegally deforested sources.

ADM has palm distribution and processing facilities in Nebraska, Illinois, Georgia and Louisiana.

“ADM and Wilmar share a commitment to environmental stewardship and community preservation,” said Ray Bradburry, vice president of ADM’s North American Oils group during the May announcement. “This enables us to offer customers a palm oil product that is fully traceable and sourced from crops that are responsibly grown and harvested.”

]]>https://investigatemidwest.org/2015/06/24/move-away-from-trans-fat-may-boost-adms-palm-oil-investments/feed/0Tax breaks, grants and ‘pay-to-play’ politicshttps://investigatemidwest.org/2015/05/12/tax-breaks-grants-and-pay-to-play-politics/
https://investigatemidwest.org/2015/05/12/tax-breaks-grants-and-pay-to-play-politics/#respondTue, 12 May 2015 11:32:04 +0000http://investigatemidwest.org/?p=6375Powerful agribusiness companies that regularly net billions in profits are major recipients of state and federal tax breaks, subsidies, grants and loans. Just seven of those companies have pocketed billions since 2000, according to government subsidy data from Good Jobs First. Tax experts say the companies get that money, at least in part, because of political muscle.

But powerful agribusiness companies that regularly net billions in profits are major recipients of state and federal tax breaks, subsidies, grants and loans, too. Many call this hodgepodge of funding “corporate welfare.”

Many companies receive welfare, experts say, because of political muscle.

“It is a synonym for what might be regarded as crony capitalism,” said Richard Kaplan, a tax law professor at the University of Illinois at Urbana-Champaign. “Meaning that – because people have particular contacts with certain policymakers – they have received financial benefits that they really shouldn’t have received and were given [benefits] primarily because of who they know rather than what they do or the merits of their particular project.”

A review of data from the national policy resource center Good Jobs First shows that just seven major agriculture-related businesses have received a combined total of more than $596 million in state and local tax breaks, grants, loans and other subsidies in the past few decades.

“When local, state or federal governments provide programs offering incentives to invest, ADM, like other companies, reviews these programs to understand the requirements and eligibility,” said Jackie Anderson, an Archer Daniels Midland spokesperson. “If our business plans align with the program’s requirements, then we apply.”

In addition to state and local funds, the seven companies have also received more than $18.5 billion combined in federal loans and grants, according to the Goods Jobs First data.

Representatives from the companies say the funds encourage economic development, job growth and research. For example, one $56 million grant Monsanto received helped create more than 600 jobs, according to a company spokesperson.

Still, critics argue the mega corporations do not need outside help to boost business.

Archer Daniels Midland, Bunge, Cargill, Caterpillar, John Deere, Monsanto and Syngenta netted a combined total of nearly $16.8 billion last year alone, according to annual company financial reports.

“When we talk about corporate welfare or business-community tax breaks, what we’re for the most part discussing are special favors provided to, typically, the biggest of the big companies,” Kaplan said.

Photo by Darrell Hoemann/Midwest Center for Investigative Reporting

The Syngenta facility in Paris, Ill., Dec. 9, 2014.

Lobbying, campaign contributions linked to corporate welfare

In order to ensure interests are well-represented in Congress and elsewhere, top companies employ lobbyists to work on their behalf.

“Generally, it’s the companies that can hire the highest-paid lobbyists,” said Josh Sewell, a senior policy analyst with the nonpartisan and nonprofit group Taxpayers for Common Sense. “Those are the ones that get the tax breaks and the most corporate welfare.”

A Midwest Center for Investigative Reporting analysis of the U.S. Senate’s lobbying disclosure database found that Archer Daniels Midland and the six other agribusiness companies spent a combined total of $16.5 million lobbying Congress in 2014 alone.

Photo by Darrell Hoemann/Midwest Center for Investigative Reporting

Agribusiness companies receive millions of dollars each year from state agencies and the federal government. The tax breaks, subsidies and grants they receive are in addition to the U.S. Department of Agriculture subsidies for farmers. (Photo illustration taken on March 5, 2015)

Compared to the other companies reviewed, Caterpillar – which works outside the agriculture industry, as well – spent the most lobbying Congress. It reported spending $6.1 million last year, according to disclosure data.

Monsanto spent the second-most, spending about $4.1 million.

The remaining five companies each spent less than $1.7 million, with Bunge spending the least at $915,000.

“It’s unfortunate, and this is one of those places where you can run across pay-to-play politics,” Sewell said.

Unlike larger companies, small businesses infrequently employ costly lobbyists. As a result, small businesses receive far fewer major tax breaks, loans and grants, according to Kaplan.

“Small business is not organized to the point of having an effective lobbying source that they can ask for these kinds of special favors,” he said. “They also can’t make the contributions to political action committees to get the attention of policymakers.”

Campaign contributions are another way businesses can secure lucrative grants and tax breaks.

Looking at the agriculture industry overall, online campaign contribution data from the 2014 election year shows that agriculture interests made more than 53,000 contributions last year. Those contributions totaled more than $90 million.

“In some cases, there is no good rationale,” Kaplan said. “It’s simply that certain corporations and their lobbyists have provided money for campaigns, and they wanted access, they wanted special favors, and this is payback time.”

Lobbying expenses for ADM, Cargill, Caterpillar, John Deere, Syngenta, Bunge and Monsanto in 2014 broken down by quarter. Data from the U.S. Senate lobbying database. Yearly totals are shown above each bar.

]]>https://investigatemidwest.org/2015/05/12/tax-breaks-grants-and-pay-to-play-politics/feed/0Agribusiness companies capitalize on tax breaks, grants, subsidies and loanshttps://investigatemidwest.org/2015/05/12/agribusiness-companies-capitalize-on-tax-breaks-grants-subsidies-and-loans/
https://investigatemidwest.org/2015/05/12/agribusiness-companies-capitalize-on-tax-breaks-grants-subsidies-and-loans/#commentsTue, 12 May 2015 11:27:04 +0000http://investigatemidwest.org/?p=6344Tens of millions of people live off of government welfare in the United States. Some say that giant agriculture corporations do, too. An analysis of data attained by the policy research organization Good Jobs First shows that just seven agribusinesses have received billions of dollars in state and federal grants, subsidies, loans and tax breaks throughout the past few decades. Critics call this vast pool of government funds "corporate welfare."

These grants, loans and tax credits are just three small drops in what critics view as a much larger corporate welfare bucket. Each year, state agencies and the federal government together send tens of billions of taxpayer dollars to some of the largest corporations in America, several of which are major agribusinesses.

“Corporate welfare is rampant,” said Josh Sewell, a senior policy analyst with the nonpartisan and nonprofit budget watchdog group Taxpayers for Common Sense. “It’s troubling.”

It is difficult to determine the exact value of the tax breaks, subsidies, grants, loans, rebates and other awards funding big agribusiness. Inconsistent reporting regulations make that nearly impossible. Publicly available data and online tools provide rough estimates, however.

A review of Good Jobs First data on Archer Daniels Midland, Bunge, Cargill, Caterpillar, John Deere, Monsanto and Syngenta found those companies have received in excess of $596 million in financial backing from state and local agencies throughout the past few decades.

Photo by Darrell Hoemann/Midwest Center for Investigative Reporting

The Cargill facility in Paris, Ill., on Dec. 9, 2014.

On a federal level, those seven companies have received at least $18.5 billion in backing since 2000, according to the data.

“Agriculture is one of the most highly subsidized sectors of our economy from tax barriers and trade programs to disaster programs and subsidized crop insurance,” Sewell said. “Washington is deeply involved in picking winners and losers in the Ag economy.”

Despite criticism from Sewell and others, representatives from the companies say the funds are boosting local economies by providing valuable jobs and supporting innovative research. For example, one long-term $56 million grant awarded to Monsanto is part of a $400 million investment the company is making to expand its Chesterfield Village Research Center in St. Louis.

That money will help hire an additional 675 full-time employees with an average salary of $80,000, according to Tyson Pruitt, a Monsanto spokesperson.

“That’s above and beyond what we already give back to our hometown each year,” Pruitt said.

To see information on other companies, explore Good Jobs First's recently launched Subsidy Tracker 3.0

Jackie Anderson, a spokesperson for Archer Daniels Midland, echoed similar claims. The company has used Illinois Enterprise Zones incentives to locate and build new operations in designated parts of the state.

“These operations are having positive impacts on their local economies,” Anderson said.

Officials from Bunge, Cargill, Caterpillar, John Deere and Syngenta declined to comment.

Photo by Darrell Hoemann/Midwest Center for Investigative Reporting

ADM facilities in Decatur, Ill., March 6, 2015.

Agribusiness in the middle of the corporate welfare pack

Good Jobs First data show Archer Daniels Midland has received as least $120 million from state and local agencies since 1991, in addition to at least $175 million in federal grants and at least $2.4 billion in federal loans since 2000.

Monsanto has received at least $78 million from state and local agencies since 1998, in addition to at least $1.1 billion in federal loans since 2000. The company has received comparatively little in terms of federal grants since that time.

Estimated totals of state and local funding through grants, subsidies, tax breaks and loans for seven agribusinesses. Starting years vary from company to company depending on available data. For more details, visit Good Jobs First. Figures in millions of U.S. dollars.

“Incentives benefit communities by encouraging companies, like ours, to make investments and add jobs that they might not otherwise,” Pruitt said. “State and local government agencies award tax incentives largely based on the economic impact of a project to their location, including the capital dollars to be spent, employees to be hired, wages compared to the community average and impact to the local economy such as construction wages, raw materials and transportation.”

Although those totals seem large, they are mediocre compared to major technology, automotive and defense companies.

Boeing, for example, has received at least $13 trillion from various state governments and local agencies across the country since 1996, according to the data.

“Some of the agribusiness companies are in a middle tier,” said Philip Mattera, research director for Good Jobs First who is also part of the team that compiles the data from publically available resources and, at times, through open records requests.

Estimated totals of federal funding through grants, subsidies, tax breaks and loans for seven agribusinesses since 2000. Data from Good Jobs First

“The agribusiness companies are not at the very top of the list,” he said.

Top companies include Intel, Alcoa and General Motors.

The review of agribusiness companies found that Caterpillar has received the most in state and local subsidies out of the seven. Since 1995, it has received more than $210 million. The machinery manufacturer has received more than $5.7 billion in federal support with nearly all of that total coming through loans.

“[People] should care because it’s their money,” Mattera said. “You now, this is taxpayer money, either at the state and local level, or at the federal level, and this money is being transferred in some way to the private sector.”

Critics call for less corporate welfare, more evaluation

While agribusiness companies continue to receive billions of dollars each year, some also hand out millions in scholarships and other awards.

Monsanto’s philanthropic arm, the Monsanto Fund, routinely “invests in programs to make our communities stronger,” according to Pruitt.

From 2012 to 2013, company announcements show Monsanto awarded $41 million in grants to more than 4,500 projects.

“Monsanto is proud to be a part of the communities where we operate around the world,” Pruitt said.

ADM facilities in Decatur, Ill., on March 6, 2015.

Nonetheless, Sewell said the amount of taxpayer dollars funding profitable companies should be scaled back.

Additionally, local, state and federal agencies need to do a better job at evaluating the economic development that the grants, tax breaks and loans are supposed to bring, he said.

“The problem with that is there’s almost never a real evaluation to see if these programs are actually working, or if they’re providing the promised economic development,” Sewell said. “What we need is to evaluate all these programs to ensure we’re actually getting a return on our investment, instead of simply just piling on program after program.”

Dozens of reports from the Government Accountability Office also call for more oversight.

“Policymakers are responsible for determining whether incentive programs designed to inspire business development have the expected return on investment,” Anderson said.

In a 2006 report on enterprise zone tax breaks, the accountability office concluded that “none of the federal agencies that were responsible for program oversight – including [Health and Human Services] and the departments of Housing and Urban Development and Agriculture – collected data on the amount of program grants funds used to implement specific program activities.”

In a 2012 report, the accountability office found that “limited data and measures are available to assess community development tax expenditures’ performance.”

Again, in a 2013 report, the office found that the federal Economic Development Administration – which awards companies grants for approved projects – was inconsistently using guidelines in place to evaluate award funding. In the report, the office noted that the administration “has a history of inconsistent documentation.”

“It’s really a question of governmental oversight,” Sewell said. “It’s one thing to create a program, but it’s another thing to make sure that program is functioning – and functioning well.”

]]>https://investigatemidwest.org/2015/05/12/agribusiness-companies-capitalize-on-tax-breaks-grants-subsidies-and-loans/feed/1Russian, U.S. farmers face similar challengeshttps://investigatemidwest.org/2013/08/29/russian-u-s-farmers-face-similar-challenges/
https://investigatemidwest.org/2013/08/29/russian-u-s-farmers-face-similar-challenges/#respondThu, 29 Aug 2013 08:10:26 +0000http://investigatemidwest.org/?p=1271The U.S. and Russia are two of the world’s top grain-producing countries and according to the U.S. Department of Agriculture - Russia will provide 22 percent of the world’s grain exports by 2021. But how, exactly, do farmers in each of these countries provide food for the masses? We visited two areas to find out - The Rostov region, one of Russia’s largest grain and oilseed producers, and Central Illinois, home to one of the largest grain and oilseed production companies in the world.

But how, exactly, do farmers in each of these countries provide food for the masses?

We visited two areas to find out - The Rostov region, one of Russia’s largest grain and oilseed producers, and Central Illinois, home to one of the largest grain and oilseed production companies in the world.

The main difference? Traders.

Traders broker deals between Russian producers on the farm and grain elevators. Typically, the traders are large and have a network of grain elevators.

While U.S. farmers have the option to bypass the elevator and sell directly to a merchant, that is not the case in Russia, the world’s third largest producer of wheat.

But allowing Russian farmers the chance to sell directly could reduce their risks and increase their profit margins.

Yuri Parshukov, Trade Union director in Rostov, said farmers stand to gain as much as $20 per ton from direct sales to foreign merchants.

Russian farmers could also avoid the danger of making a bad deal with traders who sometimes refuse to pay up.

“We knew a very trusted mediator in Egorlyk, Rostov region, who worked well, but then it owed each of the farmers several million rubles and disappeared,” said Nikolay Popivnenko, chairman of a farmer’s cooperative in the Rostov region.

Nearly 5,000 miles away in Farmer City, Ill. in America, farmer David Plunk echoed this sentiment.

Plunk is in charge of marketing the commodities at his family's 5,000 acre farm, and only sells their product indirectly, through grain elevators. But he too lamented the unreliability of selling to a middleman.

Danielle Sheppard/Midwest Center for Investigative Reporting

David Plunk posing for photo on the Plunk Brother's family farm in Farmer City, Ill., on June 19, 2013, where he is in charge of selling their commodities

“There have been times when local grain elevators...have gotten themselves into financial difficulties and take possession of your grain and don’t have the ability to pay you.”

Several states in the U.S. have insurance protections in place in the event that a grain elevator doesn’t pay. These programs repay farmers a percentage value of their grain lost. In Plunk’s home state of Illinois, farmers are repaid up to 80 percent of the value of their product.

Russian farmers are not so lucky.

“The only thing farmers could do was find a new way [of selling] or [another] company to sell their goods,” said Popivnenko.

To protect themselves, U.S. farmers will often look over an elevator’s annual financial report before they choose to do business with them.

But because of the insurance programs, reliability of payment is not the most decisive factor when choosing which elevator to work with. Plunk said he looks at the price offered and the distance of the elevator from the farm.

Regardless of country, the process of selling indirectly requires the farmer to develop a trustworthy relationship with the trader they are working with.

“You become loyal to them,” said Plunk who works exclusively with four grain elevators in his area.

“Honesty and timely payment are really important,” said Alexey Zhdanov. “We treasure these kinds of partners and advise them to our friends.”

Higher profits may not be worth it

Despite the perceived benefits, some Russian farmers are not keen on the idea of selling directly.

"We had the experience supplying wheat directly to Mediterranean countries in 2009. We came to the conclusion that it's not worth the trouble,” said Sherefetdin Kahrimanov, Director of the Kirov Common Joint Stock Company.

“The main difficulty is that farmers do not have their own shipping point.”

Lack of sufficient transportation and large storage bins are other hurdles keeping Russian farmers from selling their grain directly.

Transporting grain to port or to the buyer can be very costly and hard to coordinate for farmers with few connections to merchants.

“You spend all your earnings on logistics,” said Kahrimanov.

In 2004, the German-based trading and transportation company A.C. Toepfer International entered the Russian agricultural market promising to be one of the first companies to buy grain directly from Russian producers. The company has since established a port in Ukraine as well as various transport lines and offices in Russia, but Toepfer has failed to deliver on its promise of buying directly.

To Toepfer’s credit, buying directly from farmers is not always the most efficient route for large processing companies. “Honesty and timely payment are really important. We treasure these kinds of partners and advise them to our friends.” - said Alexey Zhdanov

The brokers used in indirect selling are useful to the farmers for logistical purposes, but they are also beneficial to merchants in that they streamline the buying and selling process by checking a farm’s documentation and doing quality tests on the grain.

Merchants are also able to buy much larger quantities of grain from brokers, who have connections to multiple producers, than from single farmers, who have a limited amount of grain.

In the U.S., the average farm size is about 421 acres, according to U.S.Department of Agriculture.

Different place, same problems

Toepfer is affiliated with and owned almost entirely by the agribusiness giant, Archer Daniels Midland (ADM), which is based in the small U.S. town of Decatur, Ill.

In Decatur, farmers have sold directly to ADM and other manufacturers in the area for years.

Brothers David and Joe Brown are two such farmers, and while they have succeeded at selling their products directly, they are not representative of the majority of U.S. farmers. Working directly with major sellers is more common in the U.S. than in Russia, but the direct selling process is burdened with the same problems in both countries.

Danielle Sheppard/Midwest Center for Investigative Reporting

David (left) and Joe (right) Brown, brothers, pose for a photo on their family owned and operated centennial farm in Decatur,Ill., on June 19, 2013.

“There’s a lot of risk associated with direct marketing,” said David Brown. “The elevators take a large margin--a substantial margin. We get that money if we sell direct, but we are assuming all of the risk.”

As in Russia, U.S. farmers must get their grain to pass a quality inspection.

Because they are direct sellers they run the risk of it not making the grade when they deliver it to the buyer.

“We’ve had some aflatoxin issues in the past years,” said Joe Brown. “That’s scary, because when the corn doesn’t pass, we have to take it home.”

In this situations the Browns are still obligated to deliver on their contract in some form. This could mean buying the contract back or blending the product with other grains until it reaches a passable quality level--both are costly options.

Transportation and storage, as in Russia, are the most prevalent barriers to direct marketing.

The Browns are fortunate-- they live roughly 15 miles away from ADM. They have also invested heavily into buying their own grain storage which eliminates the need to store their grain at the local grain elevator.

“Our father started putting up grain storage forty years ago. Joe and I kept that same idea,” said David Brown. “Tractors, combines--they depreciate. The bins will continue to give you a rate of return for 50 or 60 years.”

Even though the Browns sell directly to ADM, they are still quick to acknowledge the benefits of working with grain elevators.

“If you go to the country elevator, you’re done with it,” said David Brown. “They manage the storage; they manage the delivery. And that’s why they charge what they charge, because now the risk is in their hands.”

The extra charges incurred by working with a third party, while a detriment to the farmer’s profits, are perhaps worth it.

And it looks like these practices will continue.

In the U.S., where the option to sell directly is there, more farmers are still using grain elevators.

In Russia, some farmers don’t seem to mind paying the extra money to brokers.

“It saves our time: we don't have to load the goods in the truck. We don't have to stand in a queue,” said Zhdanov. “I think farmers should plow the land and merchants should grain trade."

This article was co-reported by the Krestianin newspaper (based in the southern Russian, river port city of Rostov-on-Don) and is part of the “Common Stories Project,” an initiative sponsored by the Washington, DC-based Eurasia Foundation to document common social challenges faced by both the United States and Russia.

This and other stories including side-by-side profiles of veterans of both countries’ wars in Afghanistan and how Americans and Russians are working together on the issue of child abandonment will be edited for publication by the Missouri School of Journalism’s “Global Journalist" this autumn.